Ford’s decision to quit car-making will see some suppliers go out of business

A NUMBER of parts-makers will go out of business as a result of Ford Australia’s decision to quit manufacturing in 2016, with some to switch to straight importing, a leading parts industry spokesman said.

Executive director of the Federation of Automotive Products Manufacturers (FAPM), Richard Reilly, has told GoAuto the decision was a devastating blow to the parts industry in particular and the manufacturing sector in general in Australia.

He was speaking from Detroit, where he is part of an automotive trade mission led by Australian automotive ambassador John Conomos, the former executive chairman of Toyota Australia.

“It is going to have a profound effect on a range of, quite a number of Australian SMEs (small and medium enterprises) and larger Australian companies,” Mr Reilly said.

“There will be severe or significant employment implications and business implications in terms of the sustainability of some suppliers.

“People who are supplying Ford to a large extent, notwithstanding diversification strategies and all the rest of the business improvement programs, if they are a major supplier and there is no longer an OEM (original equipment manufacturer) that they can supply to, well that will have negative business implications and companies will go out of business.

“Given the current production volumes, a lot of them must be close to the edge anyway.

“While it is appreciated that Ford has given suppliers over three years’ notice of its closure, the decision leaves many in the supply chain extremely concerned about their future viability.” Federal opposition industry spokesperson Sophie Mirabella has put a figure of 4000 potential jobs now under threat as a direct result of Ford’s decision to pull out of manufacturing here.

Mr Reilly applauded the federal and state governments for their quick offers of support for the affected workers, many of whom will need some retraining to have the best chance of finding new employment.

This includes an additional $12 million for the Automotive New Markets Program, which is designed to help parts-makers diversify beyond Australia or outside the automotive industry altogether.

Mr Reilly said Australian parts-makers were not sitting around just waiting for the axe to fall.

“Diversification programs are in full swing, with some automotive suppliers currently in Detroit, meeting with car companies and Tier One suppliers to talk about their manufacturing innovations and seeking to grow their businesses by entering new markets, new sectors and developing new products.” Holden has fallen short of saying it would help components makers reach out to new export markets in the wake of Ford’s withdrawal from Australian manufacturing.

The car-maker’s managing director, Mike Devereux, said today he would continue to work on relationships with parts suppliers, but gave no guarantees he would help them gain access to valuable export markets and maintain viability.

“There’s a different story frankly for every supplier,” Mr Devereux said. “Some of them have more exposure to us, or to Toyota, or Ford, and some supply all three.

“For those parts-makers that are 100 per cent Ford, obviously this is going to have 100 per cent impact on them, but we have a very, very tight relationship through a process called our supplier council.

“We’ve been working really closely with our suppliers to improve not just efficiency and effectiveness, but also other things ... to make a really world-class supply chain, and we’re going to continue to do that.” Asked if Ford’s move to quit Australian manufacturing put more pressure on Holden to help parts-makers, Mr Devereux said global products would allow “world-class suppliers” to “reach beyond just the vehicles that are made in this country”.

“For those world-class suppliers - and there are some examples of those types of suppliers right now ... - that know how to do it better than anybody else,” he said.

Mr Devereux said he thought Holden was “already doing what people would expect us to do” in terms of helping parts-makers.